JUDGMENT OF 28. 3. 1979 — CASE 90/78 GRANARIA v COUNCIL AND COMMISSION

In Case 90/78

THE COURT composed of: J. Mertens de Wilmars, President of the First Chamber, acting President, Lord Mackenzie Stuart (President of Chamber), A. M. Donner, P. Pescatore, M. Sørensen, A. O'Keeffe and G. Bosco, Judges, Advocate General: F. Capotorti Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and Issues

I — Facts and procedure

II — Conclusions of the parties

III — Submissions and arguments of the parties

A — Admissibility

1. The action based on the third paragraph of Article 175 of the Treaty

2. The action based on the second paragraph of Article 215 of the Treaty

B — Substance

1. The action based on the third paragraph of Article 175 of the Treaty

2. The action based on the second paragraph of Article 215 of the Treaty

IV — Oral Procedure

Decision

The admissibility of the application in so far as it is based on Article 178 and the second paragraph of Article 215

The substance of the application in so far as it is based on the second paragraph of Article 215

The admissibility of the application in so far as it is based on Article 175 of the Treaty

Costs

I —. Facts and procedure

1. In its judgment of 19 October 1977 in Joined Cases 117/76 A. Ruckdeschel v Hauptzollamt Hamburg-St. Annen and 16/77 Diamalt v Hauptzollamt Itzehoe [1977] ECR 1753 the Court decided that:

2. The Granaría undertaking, the applicant in this case, is engaged in producing, buying and selling, importing and exporting various agricultural products and, of particular interest in this case, quellmehl. Granaría received production refunds for quellmehl from 1972 until their abolition, on 1 August 1974, by Regulation No 1125/74 of the Council.

3. In fact it was only by Regulation No 1125/78 of 22 May 1978, amending Regulation No 2727/75 on the common organization of the market in cereals, and Regulation No 1127/78 of 22 May 1978, amending Regulation No 2742/75 on production refunds in the cereals and rice sectors (Official Journal L 142 of 30 May 1978, pp. 21) and 24 that the Council reintroduced a scheme of production refunds for the manufacture of quellmehl from common wheat and maize. The main features of those regulations are as follows:

4. The action was brought on 3 April 1978. After hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.

II —. Conclusions of the parties

1. Granaría claims that the Court should:

2. The Council and the Commission contend that the Court should:

III —. Submissions and arguments of the parties

A —. Admissibility

1. The action based on the third paragraph of Article 175 of the Treaty

(a). The Council submits that irrespective of the manner in which it complied with the judgment of the Court of 19 October 1977, it had to amend its Regulation No 2727/75. In the Council's view Granaria's action is designed to obtain a general provision of a legislative nature, identical in scope to a regulation, rather than an act of direct and individual concern to it. As the Court stated in its judgment of 15 January 1974 in Case 134/73, Holtz and Willemsen v Council [1974] ECR 1, such an action is inadmissible.

(b). The Commission endorses the observations of the Council. It adds in particular that the only legal instrument by which the equality of treatment demanded by Granaría may be established in law is the regulation. In fact a regulation is intended to contain a general legislative provision applicable to an indeterminate number of persons.

(c). Granaría submits that, with Regulations Nos 1125/78 and 1127/78, the Council has only partially complied with the judgment of the Court of 19 October 1977 and that therefore those regulations are not valid and do not render the application groundless. It considers that, as the amendment to Article 11 of Regulation No 120/67 was not valid, that article continues in force in its original version. Equality of treatment may, according to Granaría, be re-established by paying the refunds on the basis of the rules in force before 1 August 1974. Granaría further submits that the form of a regulation is not appropriate in this case and states that it has not brought this action for the purpose of obtaining a legislative provision. In this regard refers to the solutions which it suggested in its letters of 30 January 1978.

2. The action based on the second paragraph of Article 215 of the Treaty

(a). The Council submits that the application does not comply with the requirements of Article 38 (1) of the Rules of Procedure of the Court. According to the Council Granaría does not specify either the nature or the extent of any damage suffered by it. In the Council's opinion it would have been easy to give particulars of the damage, for example in the form of a numerical calculation of the unpaid refunds, since it is a question of damage which has already occurred. This is not, therefore, the situation described in the judgment of the Court of 2 June 1976 in Joined Cases 56 to 60/74 Kampffmeyer and Others v Commission and Council [1976] ECR 711, where the Court considered admissible an action for liability in respect of future damage. As no figure indicating the amount of the claim is stated, this head of the claim must in the Council's view be regarded as ancillary to the previous claim, which is likewise inadmissible.

(b). The Commission endorses the observations of the Council. It adds in particular that the Court established in its judgment of 15 June 1976 in Case 74/74, CNTA v Commission [1976] ECR 797, that the amount which may be claimed as damages can never be equal to the amount of the unpaid refunds.

(c). According to Granaria, it is clear from the application that the subject-matter of the dispute is the payment of the refunds subsequent to 1 August 1974 and compensation for the damage sustained as a result of the non-payment. Granaría is equally of the opinion that it has set out the grounds on which it relies more than adequately in its application, if this is considered as a whole.

B —. Substance

1. The action based on the third paragraph of Article 175 of the Treaty

(a). Granaría submits that as a result of the judgment of the Court of 19 October 1977 Regulation No 1125/74 of the Council is not valid. Council Regulations No 1125/78 and No 1127/78 are not valid either, in its submission, since the principle of equality between the products in question was not reestablished for the period from 1 August 1974 to 19 October 1977 and since it was not re-established for quellmehl and starch intended for use as animal feed. The consequence of the invalidity of the said regulations is, according to Granaría, that Article 11 of Regulation No 120/67 continues in force in the version existing prior to 1 August 1974 and that the refunds must be paid, in respect of the period subsequent to that date, on the basis of those provisions.

(b). The Council observes that the Court did not decide in its judgment of 19 October 1977 that Regulation No 1125/74 was not valid but rather that it was illegal and that therefore it was for the competent institutions to adopt the measures necessary to remove that illegality. But the argument pursued by Granaría would not in the Council's opinion leave the institutions any choice. Consequently the Council rejects Granaria's view that the entitlement to refunds provided for quellmehl by the rules in force before 1 August 1974 continued without interruption.

(c). The Commission endorses the observations of the Council. It adds in particular that the date of 19 October 1977 was chosen in accordance with the margin of discretion accorded by the Court to the Community institutions for the abolition of discrimination. In the opinion of the Commission the judgment does not contain any obligation to reestablish that system retroactively.

2. The action based on the second paragraph of Article 215 of the Treaty

(a). Granaría is of the opinion that the Community is liable for the damage sustained by it as a direct consequence of the unlawful situation created by the institutions as a result of the abolition of the production refunds for quellmehl, which was illegal because it was contrary to the principle of equality. According to Granaría that fact constitutes a sufficiently serious breach of a superior rule of law enacted for the protection of individuals.

(b). The Council submits that any damage should be borne by the applicant because it does not exceed the reasonable limits within the meaning of the judgment of the Court of 25 May 1978 in Joined Cases 83 and 94/76 and 4, 15 and 40/77, Bayerische HNL and Others v Council and Commission [1978] ECR 1209.

(c). Granaría states that it has not sold quellmehl for use as animal feed: it sells to buyers, who then decide what to do with the quellmehl.

(d). The Commission endorses the observations of the Council.

IV —. Oral Procedure

1. By an application made on 3 April 1978 against the Council and the Commission, the Netherlands company Granaría B.V., hereinafter referred to as Granaría, asked the Court, in the first place, to declare pursuant to Article 175 of the EEC Treaty that the two institutions, jointly or severally, had disregarded their obligations by failing to address to Granaría an act which it had requested, and, secondly, to order the Community, pursuant to the second paragraph of Article 215 of the Treaty, to compensate it for damage caused to it by the defendant institutions.

2. These requests arise from the fact that on 1 August 1974, the date of the entry into force of Regulation No 1125/74 of 29 April 1974 amending Regulation No 120/67 on the common organization of the market in cereals (Official Journal 1974, L 128, p. 12), the grant of production refunds for quellmehl, which Granaría had received after commencing production of that commodity in 1972, ceased and was re-introduced only as regards the manufacture of quellmehl for bread-making, by Council Regulation No 1127/78 of 22 May 1978 amending Regulation No 2742/75 on production refunds in the cereals and rice sectors (Official Journal 1978, L 142, p. 24).

3. The object of the application, taken as a whole, is essentially to obtain compensation for the damage which Granaría claims to have sustained as a result of the refusal to grant it the refunds which it requested.

4. The Council and the Commission have put forward an objection of inadmissibility, submitting that the application does not comply with the requirements of Article 38 (1) of the Rules of Procedure in that it does not state either the nature or extent of the alleged damage or the causal link between the acts of the Community and the damage allegedly sustained.

5. It is true that in the application Granaría merely states that it has sustained pecuniary damage as a result of the regulations at issue, reserving the right to give details of the extent thereof at a later stage.

6. In the particular circumstances of the case, however, the incomplete nature of the application need not necessarily render it inadmissible.

7. Granaría submits that the Community is rendered liable by the fact that the abolition of the production refunds for quellmehl created a situation which, in its judgment of 19 October 1977, the Court declared illegal as being contrary to the principle of equality.

8. Whilst it is true, in that judgment, the Court ruled that the provisions at issue were incompatible with the principle of equality in so far as they provided for a difference in treatment between quellmehl and pre-gelatinized starch, none the less it is clear from the grounds of the decision that that finding was based on the information supplied to the Court during the proceedings.

9. In view of the allegations made by the Council and the Commission to the effect that quellmehl had been diverted from its specific use in food for human consumption in order to be sold as animal feed, the Court ruled that, even if adequate proof that it was put to such use had been forthcoming, that could have justified the abolition of the refund only in respect of the quantities put to such use and not in respect of the quantities of the product used in food for human consumption.

10. The institutions entrusted with the operation of the scheme of production refunds within the framework of the common organization of the market may legitimately require a person who claims the refunds to provide evidence that the product is used for the purpose envisaged by the scheme.

11. It follows that the Community is not liable towards Granaría and consequently the application must be rejected as unfounded in so far as it is based on the second paragraph of Article 215 of the Treaty.

12. The claim submitted by Granaría under Article 175 of the Treaty seeks a declaration that the defendant institutions have failed to fulfil their obligations by not acting upon the request which Granaría had addressed to them, asking them to pay the refunds claimed by it and to recognize their liability for the damage which their conduct had caused.

13. The third paragraph of Article 175 provides that any natural or legal person may, under the conditions laid down in the first and second paragraphs of the same article, complain to the Court of Justice that the Council or the Commission has, in infringement of the Treaty, failed to address to that person any act other than a recommendation or an opinion.

14. The only legal instrument which would have allowed satisfaction of the claim made on the two institutions in this case would have been a regulation authorizing the reintroduction of production refunds for quellmehl and laying down rules for the compensation of any damage caused by their abolition.

15. Thus the application must be dismissed as inadmissible in so far as it is based on Article 175 of the Treaty.

16. Under Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs.

On those grounds, THE COURT hereby:

1 Dismisses the application;

2 Orders the applicant to pay the costs.